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Friday Free For All

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165 Comments

It’s time for our regular open topic Friday Free-for-all post here on VancouverCondo.info!

– But why are they really selling?
– Vancouver sales slow to 2001 levels
– Keep building stuff and they’ll keep coming
– Canadian prices (except Edmonton) rising
– 40 years terms add fuel to the fire
– TD Chief Executive gets all gloomy
– AAA rating not what it used to be
– Bernanke: Housing crash not Feds problem
– An eye out for mortgage fraud

So what are you seeing out there?  Post your news, links, and anecdotes here and have a great weekend!

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bdk

This applies to this thread much more (pasted from Odlum Browns market report): When a particular asset class delivers outstand- ing returns over an extended period, investors become convinced that there are solid funda- mental reasons for the trend. Theories are developed to justify participation and disregard valuation considerations. In the early ’70s, the “Nifty Fifty” stocks like Polaroid and Xerox were going to make money forever. At the beginning of the decade, the Internet was going to render traditional industries irrelevant. Today, growth in China and India is expected to translate into a permanent shortage of commodities. Remember when people said tech stock could never lose money because the internet was never going away? Also During the technology mania, valuation consider- ations were dismissed due to fear of missing out and underperforming “hot” investment man- agers committed to the… Read more »

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chunker

Instead of arguing with guys like Rob A and Krrish we should really be encouraging them to buy up as much RE as they can. It truly is to our advantage to encourage these people to continue to inflate the balloon. The higher it rises the harder it will fall – we will benefit from a steeper correction.

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Anonymous

This Rob A. guy must be joking with us. It has to be sarcasim …. people aren't that dumb to post:

"I was having cocktails at Opus Bar and I told my friends about this blog. We all had a good laugh"

Please leave me with a little more hope in the human race …..

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sheeplessinvancouver

I don't have the link, but if you go to the CMHC site and download the free publication Canadian Housing Observer 2007 there is an explanation of how sub prime and near prime mortgages work in Canada.

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jesse

"I think your idealism is great but it’s just unrealistic, the CMHC has shown ever intent to help the banks out of the housing jam while screwing over common folk, why would they change?" I agree it's within the government's mandate to tell CMHC how to spend money. I personally think what will happen is the crap will hit the fan and CMHC's first reaction will be to sieze payments wherever possible to preserve their balance sheet — they are viewed as successful in their owners' eyes if they don't cost anything. The banks will fight tooth and nail, pull strings in the government and eventually CMHC could start flood the lenders with government money. But this will not happen overnight and could take many months before anything happens. The fear is, by the time lenders realise CMHC is relaxing… Read more »

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Drachen

"if CMHC wants to, they can nickel and dime each payout and delay payment in the process"

I don't think you understand the political relationship banks have in high places. If that were to happen (not likely) the banks would lean on the government and the government would lean on the CMHC to loosen the purse strings.

I think your idealism is great but it's just unrealistic, the CMHC has shown ever intent to help the banks out of the housing jam while screwing over common folk, why would they change?

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jesse

"Banks are large institutions with ways of twisting arms that your average home owner " Having worked at a large company I can say that individual claims are rarely pooled. Each loan is different and there will always be enough exceptional cases to warrant more than just filling a checkbox on a computer screen. My point is that, if CMHC wants to, they can nickel and dime each payout and delay payment in the process, the sole purpose being to shore up their balance sheet. "if the average person with a high risk loan pays only one year the bank has still made money on the deal, even if it’s not quite as much money as they’d like." This is true however the foreclosure process is not free. It costs many thousands of dollars, likely pretty close to and likely… Read more »

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Drachen

Jesse

I disagree with point # 2

The CMHC has acted very poorly up until now, they likely will never prove any wrongdoing on the side of the banks in cases of mortgage fraud so they'll get the money. Banks are large institutions with ways of twisting arms that your average home owner with an insurance claim cannot match, the CMHC will be prompt in their repayments. Your first few years of paying off a 40 year mortgage is almost all interest, which is money that goes straight to the bank, so if the average person with a high risk loan pays only one year the bank has still made money on the deal, even if it's not quite as much money as they'd like.

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jesse

"our 5% is a much bigger deal than US’ 8.64%. And besides, you can’t walk away from a Canadian mortgage than you could with some American mortgages, which could compound the situation even worse." There are arguments for Canada's situation being better AND worse than the US. IMO "subprime" is merely a symptom and we will see plenty of "prime" issues as well. The subprime stuff was just the first in line to hit the fan. Canada has subprime and lots more prime. There will be fallout but it may not be as explosive as the US. It's silly to think that CMHC MI is going to save the market. MI is merely a stop against outright default but BANKS LOSE MONEY WHEN THEY INVOKE CMHC POLICIES. I love the logic: 1) CMHC underwrites loans 2) Therefore I can issue… Read more »

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Anonymous

No matter what they call it, I bet that mortgage applications and fraud gets a bit more attention once the market starts falling, just like it is in the states.

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admin

There's a simple solution to the whole debate over whether or not there's a 'subprime' issue here. All we have to do is refer to buyers taking 40 year mortgages with less than 20% down as 'prime' or even better 'uber-prime' and then we have no sub-prime problem here!

Doubleplusgood!

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Carioca Canuck

Yeah right….there's no subprime in Canada. Pffffttttt…….

IIRC something like 50% of "ALL" the mortgages that were granted in CALGARY in 2007 were 30-40 year amortizations and CMHC insured…..which IMHO, and I have to call it for what it really is…..were "SUBPRIME".

Givng too much money (a 100% increae in 24 months), to someone with little or no vested interest (0-5-10% etc down), on weak terms (40 year ams) is suprime. Doesn't matter how good or bad their credit is.

Vancouver has to be similar……..

An entire generation of 20-30 year olds is going to get slauighteredn their newly bought $400K shoebox condos are worth 20-20-40% less then their mortgages…….

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Dormammu

I found this from the American http://www.loanpage.com glossary:

"The term BC & D is a rating of the loan. Similar to Moody's Rating scale for Bonds as AAA, AA, A, etc. Generally, loans termed as A paper are for borrorwers with very good credit. BC & D lenders specialty in BC & D loans. For the most part, on our web site, we refer to BC& D as "problem or troubled" credit rather than using these letters. "

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Drachen

Van Man

They're ALWAYS focusing on sub prime as the excuse. The fact is housing is collapsing in the states (and worldwide) because it peaked. It was way out of line with fundamentals in many places, now it's returning. This business cycle has taken place thousands of times and the ending is always the same. Gambling against that is like gambling that the sun won't come up tomorrow.

It is an event that has been recorded thousands of times.

The outcome is ALWAYS the same.

There is no evidence to support the notion that we are significantly different this time to alter the outcome.

One definition of insanity is, "Doing the same thing over and over and expecting a different outcome."

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Dormammu

I'd also like to know what this could mean:

"something similar like lender B and C. I’m not sure what he meant by that. Maybe someone here could elaborate?"

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Dormammu

USA housing prices fell before sub prime mortgage problems surfaced. At best you can say that the sub prime crisis accelerated housing depreciation. So I would look at the comments they made with even more skepticism than even you suggest.

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-A-

The Van Man:

"Patricia Lovett-Reid, senior vice president of TD Waterhouse Canada Inc., "

Enough said.

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The Van Man

Here's an interesting note.. I happened to be watching a show re-run of BNN with Patricia Levitt Reed interviewing a person from the real estate industry. He was talking about how different the Canadian market is compared to the US and that we won't suffered a similar downturn like they do. Then Patricia asked him if we have subprime mortgages in Canada. He said no, but in Canada we got something similar like lender B and C. I'm not sure what he meant by that. Maybe someone here could elaborate? But what got me interested was when he brushed it off as being not a big deal. He said, it's only 5% of the total mortgage and that, it's really not as bad as the Americans with their subprime.. If Patricia and that gentleman would have done some due diligence… Read more »

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vanguy

30 years at these prices? bite me…Lots of people are going to die off in the next few years, no matter what kind of medical advancements we have. Their properties will be inherited by scum younger people who by and large will want to liquidate. Boomers also have nothing saved here in the US, dont know about Canada. That;'s going to keep the implosion going for years. I dont think Van's going to get past 2010 before the bust stinks..

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Drachen

Here's the breakdown on media reporting, comic style.

This Modern World

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jayceee

has anyone read this forbes article? very interesting.
http://blogs.forbes.com/digitalrules/2008/04/crui…

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blueskies

babelizer:

i took boilerplate from Bob Rennis site and ran it through babelizer:

Conduit Bob Rennie, specializes Rennie Marketingsysteme, to formulate the plans of risk management single and effective concerning Wohnkondominiummarketing. Narrowly working as "a representative of the promoters", Rennie defines Marketingsysteme Kondominiumtoleranz, mark of the tendencies of consumer and offers solutions, to carry out market demands. Rennie Marketingsysteme has the admirable relations of Canada with respect to the larger promoters and most progressive and now forms the same relations in the United States.

needs another couple of go arounds….

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tacoman

Hey -A-,

I see you're doing not bad at all writing in Krrishes lingo. Mind if I ask you where you bought that English to Krrishean dictionary? It might sell for $$$ on eBay 😉

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bdk

I was at the Opus lounge and I saw a bunch of valets having drinks and I bet one one of them was "Rob A" I was going to sit this one out since there's no point trying to tell a dumb shit like him anything but don't worry he'll remember what a goof he is when he grows up a bit and realizes he thought past performance indicated future return. There were idiot valets who bought tech stock right before it crashed too and they certainly aren't laughing about it now. He probably just got into the market and lives at Spectrum. It hasn't occurred to him that if "everyone" wants to live downtown they could have bought in the last 120 years but since he was still in Abbotsford ,living with Mummy, he didn't know the first thing… Read more »

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The Van Man

Most Canadians have a lot of their equity (savings) tied up in real estate. They have very little in terms of savings outside of this, so they really depend on the appreciation aspect of the RE to fund their retirement lifestyles. There are a lot of people who do tap the equity out of their homes. There was a whole slew of stuff like this being sold in the late 1990s by a lot of people. Gordon Pape and Garth Turner are the two that came to my mind. You rarely see them do that these days. Mr. Turner even, at one point in time, had a TV show of his own called the Millenium TV and his forum website, not to be confused with another TV Sci-Fi show of the same name. When I was blogging on his site… Read more »

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